Chip Firms Push Back Against U.S. Trade Restrictions on China

Chip Firms Push Back Against U.S. Trade Restrictions on China
US Commerce Secretary Gina Raimondo

The Lede: On Monday, executives of U.S. chip companies met with top Biden administration officials to discuss trade policies regarding China while the industry’s lobbying group called for continued access to the China market.

What We Know:

  • Executives from Intel, Qualcomm, and Nvidia met with Secretary of State Antony Blinken, Commerce Secretary Gina Raimondo, National Economic Council director Lael Brainard, and National Security Council director Jake Sullivan.
  • The discussions involved talks of supply chains in the industry, speeding up the disbursement of government money allocated to semiconductor firms in the CHIPS Act, and making sure that U.S. policy does not shut the chip firms out of the Chinese market.
  • Earlier in the day, the Semiconductor Industry Association (SIA), which is a U.S.-based lobbying group for chip firms, released a statement calling on the Biden administration to pull back on its harsh restrictions on chip sales to China and warned of the negative consequences of the current policy path.
  • On Wednesday, the China Semiconductor Industry Association (CSIA) released its own statement regarding the damage that restrictive U.S. chip policies toward China would inflict on the global supply chain and the greater world economy.

The Background: In October last year, the US. Department of Commerce issued measures to bar the sale of semiconductor equipment and high-end chips, especially those used in artificial intelligence technology to China. Last month, the Biden Administration announced even tighter restrictions on exporting advanced chips to China. Following that announcement, China announced limits on the export of germanium and gallium, which are vital for the production of semiconductors and other important technology products. The U.S.-led chip policies have led other countries such as the Netherlands to follow suit on exports to China. In May, China banned purchases from Micron Technology as a retaliatory measure against U.S. and Western sanctions on its chip sector. Last year, China accounted for $180 billion in semiconductor purchases, more than a third of the worldwide total.

Likely Outcomes:

  • The U.S. government may decide to pull back a bit on its restrictive chip policies toward China, but the technological competition will not allow this to a significant degree. Restrictions may follow a lag pattern whereby U.S. and Western firms will not be able to sell the latest, most advanced semiconductors and equipment to China right as they come into production, but may phase them into their offerings once even newer, more sophisticated chips come into existence. This could spur these firms into ramping up research and development processes in order to keep up with demand as the geopolitical, economic, and technological landscapes shift.
  • China will continue to buy from the U.S. and Western chip industries, but will likely focus a great deal of effort on developing its own industry to reduce its own dependence on foreign supply chains. In the future, China’s trajectory may follow that of their electric vehicle industry where domestic EV firms rose to rival and compete with foreign car companies.


Allowing the industry to have continued access to the China market, the world’s largest commercial market for commodity semiconductors, is important to avoid undermining the positive impact of this effort. Repeated steps, however, to impose overly broad, ambiguous, and at times unilateral restrictions risk diminishing the U.S. semiconductor industry’s competitiveness, disrupting supply chains, causing significant market uncertainty, and prompting continued escalatory retaliation by China. We call on both governments to ease tensions and seek solutions through dialogue, not further escalation. And we urge the administration to refrain from further restrictions until it engages more extensively with industry and experts to assess the impact of current and potential restrictions to determine whether they are narrow and clearly defined, consistently applied, and fully coordinated with allies.” – Semiconductor Industry Association (SIA) statement

"China's semiconductor industry is rooted in and developed from globalization. We welcome open cooperation, and will work with all the countries and regions willing to collaborate with our industry to safeguard the globalization of the semiconductor industry, and to assist government and authorities to facilitate international cooperation in the industry." – China Semiconductor Industry Association (CSIA) statement

Good Reads:

Chip companies, top US officials discuss China policy (Reuters)

Chip Firms Meet US Officials on China as Lobby Warns On Curbs (Asia Financial)

American chip companies need access to China and want to avoid ‘ambiguous’ sanctions, US chip trade group says (SCMP)

US threatens global collaboration in semiconductor industry (China Daily)

SIA Statement on Potential Additional Government Restrictions on Semiconductors (SIA)